eToro Leads the Tokenization Charge

As bitcoin (BTC) celebrates its 10th anniversary, the placing of a much wider range of assets on the underlying blockchain in the form of tokens is one way to continue the sector’s growth into its second decade, says eToro’s Guy Hirsch.

Guy Hirsch

A social investing site targeted at consumers, eToro allows its users to evaluate posts by other members by reviewing their portfolios and performance. As it prepares to move into the U.S. market, the company is working with regulators at the same time it is transitioning its trading platforms, which predated the rise of cryptocurrency as an asset class, onto the blockchain.

Hirsch, eToro’s U.S. managing director, spoke with ThirtyK about the legacy of Satoshi Nakamoto’s white paper, the importance of education in getting consumers to adopt cryptocurrency and blockchain faster, and why tokenizing illiquid assets is the wave of the future.

Before coming to eToro, Hirsch was director of innovation strategy at Samsung SDS, the company’s enterprise IT solution subsidiary, and held other roles at Samsung.

ThirtyK: We’re talking on the 10th anniversary of the introduction of bitcoin. How would you describe where we are a decade in?

“We feel our future is on the blockchain, and we want all the assets on our platform to be represented as tokens.”

Hirsch: Whoever wrote the [white paper] — one person or a group of people — not just figured out brilliantly how to develop a technology that allowed us to develop decentralized money, but also how to have an ideological motivator. You had a growing movement of not just developers and people who understood the technology, but also people who believe in the idea and ideology of decentralized money and systems as a whole. That is why a lot of people are [trying] to make this idea a very central part of our lives…, not just in payments and money, but in leveraging this technology for other products.

How Consumers See Crypto

ThirtyK: After a decade, how are mainstream consumers thinking about the crypto space?

Hirsch: Clearly, more and more people are becoming aware of blockchain, bitcoin and ether (ETH). There’s brand recognition, [but] their main source of information is family and friends. What I think we should do — eToro and the industry as a whole — is move the education into a more formal setting.

For example, educating financial planners about cryptocurrency and crypto assets as an asset class, and how to advise their customers. Once we get into a more professional setting of crypto education, we’ll see the next wave of adoption because people will hear it from people they trust — the professionals — and go in with more confidence and a greater understanding of the risks involved.

ThirtyK: What does education look like in this space?

Hirsch: To really understand the blockchain, you need to understand code, and that’s frightening for a lot of people. We need to do a better job of visualizing these things so people have a better sense of what’s going on. Then you get into the specific blockchains and tokens. People have heard of bitcoin and ether, but how many people can explain the difference between them?

If we explain the technology, if we explain the difference between each blockchain and the risks that are involved in them, it will help a lot of people get over the hump and into the space.

Building Trust

ThirtyK: How does eToro help educate its users?

Hirsch: One of our key strengths is our powerful content by [users] whose portfolio and track record are shared across the community. In other words, people can see how you’re doing. If someone says something, you can quickly look at their portfolio and see if they’re doing well. Then you have a lot more trust, and we have a lot of interaction where people are asking each other questions.

Usually when you’re buying assets, it’s a solo experience. You’re alone in the platform, and the educational material is outside of the platform. In eToro, everything’s native. The education and the execution is combined. It’s a much more supportive and richer environment.

ThirtyK: eToro is emphasizing tokenizing assets ranging from art and real estate to gold and diamonds. Why is that so important?

Hirsch: That’s one of the chief reasons we’re so excited about the future. You have millions of people who are very enthusiastic about art. They go to museums, but they could only dream about owning these paintings. What if we could take them and go through the legal process to make sure it’s compliant and put it on the blockchain to allow people to have fractional ownership?

There’s a lot of value on both sides of the equation. If you want to have fractional ownership of an illiquid asset, the process is extremely cumbersome. Things that are illiquid are not priced the way they would be. On the buyer side, you have access to assets you didn’t have before, and you can have fractional ownership. It will make the world a lot more efficient and a lot more interesting.

eToro as a whole is transitioning [in this way]. We feel our future is on the blockchain, and we want all the assets on our platform to be represented as tokens. There’s greater portability, a greater degree of transparency, and it means new investment opportunities where you can use these crypto assets to do everything else you do in traditional markets…. maybe get interest, maybe borrow against them. That will open up a lot of opportunity.

Our brand will be a global blockchain powerhouse in transitioning to this new model of doing business and executing on the vision of…accelerating blockchain and crypto assets. We’re excited to be leading the charge.